The most shocking part of the third debate between President Barack Obama and Republican presidential nominee Mitt Romney on Monday was how little attention they paid to China. I counted an hour and 15 minutes before the subject even came up in earnest. That’s not to say the other topics discussed — terrorism, the Middle East, Afghanistan — aren’t important as well. But looking out over the next several decades, the rise of China to superpower status is, in my opinion, the single most important foreign policy challenge facing the U.S. We’re shifting back to a bipolar world from Pax Americana, and whether that results in a new Cold War or a more peaceful, prosperous globe will depend on how Washington handles a richer, more assertive and more powerful Beijing.

That means the China policy of the next President of the U.S. is of crucial importance for the future of America and the economic and political stability of the world. So the big question is: Does Obama or Romney have a sounder, smarter strategy on China?

It is not an easy question to answer. Both candidates have engaged in rather unproductive attacks on China to score political points with an electorate frustrated by the feeble recovery at home. To both Obama and Romney, China can easily be portrayed as an irresponsible adversary, stealing American jobs and technology through various nefarious trade practices. Each candidate has tried to convince voters he’d be tougher on China than the other guy in protecting American interests and workers. Let’s look at some major issues with regard to America’s economic relationship with China and where the candidates stand on them:

CHINA’S CURRENCY

For me, the most misguided statement on China comes out of Romney’s mouth. That concerns China’s currency. Here’s what Romney said during Monday’s debate:

On day one, I will label [China] a currency manipulator, which allows us to apply tariffs where they’re taking jobs … We have to understand that we can’t just surrender and lose jobs year in and year out.

Romney is really out of date on this one. The whole issue with China’s currency has been overblown for years. Yes, it is true that China does not have a freely traded currency properly valued by market forces, and some believe it should be appreciating against the dollar more rapidly than it has been. But the idea that a stronger Chinese currency can eradicate the U.S. trade deficit with China has been debunked. Since 2005, the Chinese currency (the yuan) has appreciated by more than 30% against the dollar. But the U.S. trade deficit with China increased by 46% from 2005 to 2011. The reasons why the U.S. has a persistent trade deficit with China goes well beyond the value of China’s currency, into the structure of the two economies and how they are connected together. Labeling China a “currency manipulator” won’t do very much to alter the economic relationship between the two nations.

And it might just make matters worse. Sticking such a tag on China will very likely cause Beijing to retaliate with measures aimed at keeping American goods out of the hands of increasingly wealthy Chinese consumers — something U.S. companies, suffering from feeble economic growth at home and in other markets, can’t afford to have happen right now. If the “manipulator” label ends up resulting in punitive tariffs on Chinese goods imported into the U.S., the prices of those goods will increase for American consumers, further straining the wallets of a workforce already strained by debt and joblessness. Suppressed consumption in the U.S. won’t do any good for American retailers or the many U.S. companies that manufacture their products in China for sale at home.

Obama is much more reasoned on the currency issue. He noted in the debate that the yuan has appreciated, saying that “actually currencies are at their most advantageous point for U.S. exporters since 1993.”

TRADE CONFLICTS

There’s not much space between the two candidates on the issue of trade. Both like to talk tough on this issue; both like to claim that unfair practices by China cost American jobs. Here’s a typical comment, from Romney in Monday’s debate:

We’ll also make sure that we have trade relations with China that work for us. I’ve watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules.

Does China play by the rules? To a certain extent, no. The government does subsidize Chinese industry, both directly and indirectly. Foreign companies face restrictions in accessing the China market. In general, though, both candidates (and the American public at large) have to get beyond the idea that specific trade policies in China have somehow undercut the U.S. economy. The reality is that China has real competitive advantages, mainly a large, low-wage, quality workforce. Companies from the U.S. and elsewhere have moved production to China to capitalize on that workforce, not because the Chinese government fools around with its currency or helps its state enterprises. There isn’t a whole lot trade policy can do to change that equation.

That isn’t to say U.S. policy can’t assist specific American industries and companies in competing with or benefiting from China. The U.S. needs to press China to open markets more widely to U.S. exporters and investors. China, as Romney continually points out, has to do a much better job of protecting intellectual-property rights. Obama has actually struck upon a pretty good way of pressing China to improve its trade practices — utilizing the World Trade Organization. Here’s what Obama said on this front:

I know Americans had seen jobs being shipped overseas; businesses and workers not getting a level playing field when it came to trade … That’s the reason why we have brought more cases against China for violating trade rules than the other — the previous Administration had done in two terms. And we’ve won just about every case that we’ve filed, that has been decided.

China takes its WTO responsibilities very seriously, and the organization is seen as a relatively impartial arbiter of such disputes. Rather than going head to head with Beijing, using the good offices of the WTO could produce some real results.

JOBS

Both candidates claim that standing up to China will create more jobs for Americans. That may be true in very general terms. Opening up China to American exports and investment would probably create more jobs at home. But Romney takes this too far. He adds “cracking down” on China to his list of methods to create 12 million new jobs. I don’t see how he can promise that taking a harder line on U.S.-China trade can somehow produce a specific number of jobs. Both candidates also have to be wary that efforts to protect jobs — by imposing tariffs on Chinese products, for example — don’t in the end help the U.S. economy. For example, in Monday’s debate, Obama repeated a claim that slapping tariffs on Chinese-made tires helped American workers:

We had a tire case in which they were flooding us with cheap Chinese tires. And we put a stop to it and as a consequence saved jobs throughout America.

Perhaps the tariff helped a few employees of tire companies. But the policy also likely caused Americans to spend more on tires. A study by the Peterson Institute for International Economics figured that Americans spent $1.1 billion more on tires in 2011 because of the tire tariff. That’s the problem with using protectionist policies in an attempt to preserve jobs.

Neither candidate impresses me all that much on China. Both seem to suffer from the out-of-date notion that we can “stand up” to Beijing, as if the power balance between the two nations hasn’t drastically changed over the past decade. I find Romney’s rather simplistic approach to China a bit surprising for a guy who claims to be a business guru. Romney morphs from a champion of free markets and private enterprise into a proponent of tariffs and state protection when it comes to China. I fear his combative attitude would sour relations with Beijing and lead to retaliation.

Obama’s rhetoric is not helpful either, but, in my opinion, he does see America’s relationship with China in much broader terms than Romney. Contending with China doesn’t just mean fixing currencies and resolving trade disputes. It requires preparing the American workforce for even more intense competition from a rising China in the future. Here’s what Obama said on Monday:

Over the long term, in order for us to compete with China, we’ve also got to make sure, though, that we’re taking care of business here at home. If we don’t have the best education system in the world, if we don’t continue to put money into research and technology that will allow us to create great businesses here in the United States, that’s how we lose the competition.

Obama realizes the U.S. will need all the advantages it can get in order to maintain its competitiveness. Romney seems to believe all the U.S. requires to maintain its competitiveness is tax breaks. Both candidates talk about creating a level playing field with China. Obama has a stronger, wider vision of how to make that happen.

By focusing on china trade, america misses the point. Why does Japan, a developed country with wealth and wages equaling our own, run a 60B trade deficit with us? They have almost the same treasury holdings as China, but they are 1/10 the population of China and 1/3 the population of US. And they are about to retake the crown of top lendor to the US. You want to talk about trade mercantilism and protected markets? There is no reason for this. Stop buying japanese.

What the Republicans really want is to reduce the American middle class to the middle class standard in China. Low wages, dismal quality of life. Then they will realize the best of both worlds in investment returns.

There's a rest of the world out there beyond China and the Middle East, and it draws little mention.

a return to a bipolar world? based on what? China's size? The last time China was the worlds largest economy was at the same time colonial powers and japan were beating them to a pulp. China is on the rise, but they are not catching up.America's global mil and soft power are unmatched globally...economically we retain the worlds leading higher education schools, we invest 9x the amount of China in R&D, etc. so even if china does surpass the US economically, which is should based on population, it does not make the world bipolar. we are actually increasing our wealth gap versus China since 1991. China is on the rise, but it doesnt mean they are catching up.

So nothing on the Benghazi emails on the Times website this morning? Do the media have for the American people the same disdain the president has for his opponent? Keep on the good disinformation job, and Mitt Romney will keep his momentum...

An economically active China is a valid competitor / partner. Their emphasis on technological progress will help us all.

The problem is the imperialism. The vicious fight over the islands near Japan and near the Philippines is a transparent effort to capture half of the Pacific Ocean as their inland lake, ignoring the Law of the Seas. This has been backed up by the rapid build up and deployment of Chinese naval resources to emphasize their military intentions.

All depends on whether the military leaders in China get the upper hand -- they have already fired up their entire population with stupid territorial claims based on ancient history and that will be tough to turn off and get back to economic progress. Wow do I hope they can shut off the land / ocean grab, because the world cannot put up with that.

SIMPLE SOLUTIONSWe must get away from being4th on Inequality and 3rdLeast taxed in OECD nations.Least taxed led to InequalityFed fund campaigns and electionshang corporate personSix months—3 primary 3generalFree equal tv time-use no $$$$$ personal ordonationsDebate a week=12=adequate to evaluatecandidatesFederal employees can accept nothing with afinancial valueProgressive Tax system—Burn tax book startover—tax enough to pay our way and pay down horrid debt—We did it1945-1980---Since 1980, we borrowed $15,000 Billion as the rich became ultrarich partly on borrowed money.

The trade imbalance is just a portion of the problem with China's currency policy. Consider the 2007 US real estate meltdown. Cheap mortgages fueled an unsustainable real estate bubble. Many have argued that short-term interbank interest rates caused this, but it is just not so simple, as was evidenced by the Feds ineffectual attempts to raise the rate and cool the real estate market. What caused it then? Simple oversupply of US dollars into dollar denominated mortgage backed securities (and US treasuries). Where did it come from? Many places, but in no small part from the sovereign wealth fund of China. Why did they have so many dollars? Their currency policy kept the wealth out of the hands of domestic consumers (for the sake of political control and export expansion), and they needed to invest them somewhere--the safe assets of mortgage backed securities and US treasuries were the obvious targets, both got way cheaper than they ever should have been. Does China deserve all the blame? No more than a drug dealer deserves the complete blame the bad habits of the junkie (the US is/was clearly a credit junkie). But if China had not had their currency policy, our present mess created by other fundamental issues, might be so dire.

I think considering the political implications this article is biased because of a very simple fact that Romney and Obama have a very different background.. the issue is that Obama has a record to protect where as Romney is trying to create a platform. If the roles were reversed, I believe Obama would have come out stronger and Romney more in a more cautious way. Foreign policy is always about continuity, never about drastic changes with changes in presidency.

US always talks about trade imbalance with China but what you got to offer on table.All household goods,China did it cheaper. Hi-tech and military hardware you won't sell and what else you can sell,none.For investment you won't let Chinese to come in with national security reason.Soon Chinese will kick out the US company like GE and Cisco for the same reason also Huawei can do a better job and cheaper.You can't have a whole pie all by yourself,you have to share.

Thanks for Mr. Schuman's objective and fair-minded analysis. It is politically expedient to blame China for the weakness of the US econmy and unemployment rate--but it does not reflect well about the American values of free trade and competition.

You are basically saying that China isn't a currency manipulator, BUT they manipulate their currency? Hmmmm. And that tariffs on Chinese goods won't help, and will probably hurt the US economy? That'a all fine and good EXCEPT.

1) Tariffs WILL change the trade balance to China. American companies faced with huge costs to buy Chinese will invariably go somewhere else. China will lose money as they need our purchases more than we need their goods.

2) If tariffs were followed by incentives to build goods in America, say, tax breaks for workers hired, then companies would insource for a change. As the tax base expands with new workers this will offset the tax breaks.

3) Over time, China having lost it's largest revenue stream will come under great pressure form within and without to make changes in the best interests of both the Chinese people and the US.

4) With rising self sustainable growth comes a leadership role in the world.

Obama forgot to mention that after the bailout, GM has outsourced a record number of American jobs. Chrysler is now a subsidiary of Fiat, a foreign company. What Fiat doesn't own is owned by the UAW, which is why they went bankrupt in the first place.

Typo: [Obama’s rhetoric is helpful either] should read "isn't." Great article. Romney may have a better understanding of China than he portrays. His main goal in these debates is to align himself with voters, at any cost.

"If the “manipulator” label ends up resulting in punitive tariffs on Chinese goods imported into the U.S., the prices of those goods willincrease for American consumer..."

In other words, goods produced in the United States would be more competitive. That would not be a bad thing. China is rising to Superpower status because we buy enough goods from them to finance the modernization/expansion of their military.

The problem with Romney and foreign policy is that he insults our allies and does business with our enemies. An example is his China stance. He says we should make China play by the rules and ignores what the Obama administration has done. “The Obama administration has filed more complaints against China with the World Trade Organization than the Bush administration before him.”(WSJ) At the same time as these complaints were being filed, Romney was investing in a Chinese national company that was working in Iran during the embargo. It looks like Obama is the one doing the job for the country while Romney works for China. In the Middle East, given Romney's speeches and debate performance, we would have our foreign policy dictated by the Israelis. The United States should not be the dog wagged by the Israeli tail. We should have our own foreign policy that treats the whole world fairly.

@polk1120 You seem to be very poorly advised POLK. China was never a major economy under colonial powers. On the contrary. Because of the opium wars it suffered tremendously from foreign domination. It took more than 70 years from then on but they are now back in the game. With regards to education, according to a report by famous Pearson company the US only ranks 17th in the world with Korea and Finland taking top spots. And looking at 2011 NBC news report on education U.S. students ranked 25th among 34 countries in math and science. Shanghai schools being at number one.

Let me touch real quick on those e-mails. After every attack dozens of individuals and organizations come out of the wood work attempting to claim credit. Until our intelligence services investigate and assign responsibility, none of those claims are anything more than just that. Even if they knew early on that a terrorist group was responsible for the attack the CIA obviously felt it was valuable to maintain the "video" story as a way to make the perpetrators more complacent and easy to track. What I want to see covered is how the Republicans hoping to weaken Obama's foreign policy credentials have turned this into a political circus and have now divulged native CIA and State department intelligence assets to the world.

@meddevguy BLA BLA BLA... YOU obviously have no clue what you are talking about. Have you studied international Public Law and understand all the ins and outs of territorial and international seas ? Have you? You haven't. No more than you understand the recognition of other countries land under international law. So please restrain from idiotic comments unless you have interesting comments to make. You are trying to sound interesting about the military leaders in China. But in reality, the military leaders are the same people who make the economic decisions dude. And for your record the world is not black and white with the US being the white knight and the rest of the world being to dominate.

@ChristopherWee You are damn right Christopher. I sincerely wish the dominant economies in the world such as EU and the US would understand that. These guys work 7 days a week and would give you authentic service like you cannot get anywhere else in the world. We can blame then for all our trouble but the truth is if it wasn't for the trade barriers we would be crushed by now.

Chinese people are smarter with their money, there's no question about that. They really know how to save and are a lot more savvy about avoiding getting stuck into buying stupid unnecessary junk or fooled into racking up debt (at least the older generation; the new generation is consumerist as heck and will probably emulate the worst excesses of the American consumer within the next decade or so).

But harder working? No I would not say that. They work longer hours, but 90% of most Chinese people's work day is consumed by browsing the internet, chatting on QQ, playing cards, getting half drunk at 3 hour lunch breaks, and so on. Chinese companies hire 6 workers to do the job that 1 full time and 1 part time American (or Canadian or member of any other first world country) would do. Grade school teachers, for example, teach only 6-12 classes per week. In Canada teachers have 6 classes a day.

And better family values? Based on what? China has more broken homes than anywhere I've ever been. But divorce is rarer because it's embarrassing and men have too much legal power over women so women just basically have to endure it if their husband won't let them go. Poor people with marriage problems just live miserably and tend to get ridiculously drunk most nights; rich people live in seperate cities, the man usually has multiple mistresses, and they only see their children on New Years while somebody's grandparents get to do the real work of raising the kids.

@ChristopherWee Not really a fair comparison is it? If you compare workers from different cultures at different level of social, political and economic development they aren't going to match up easily. I think condemning China is about the leadership, not its people.

You're dreaming. Do you have any idea what kind of tariffs and tax breaks would the US need to implement before it's cheaper to produce most goods in America? There's a reason that goods are cheaper in China--it's because the migrant workers that are making those things live in tiny filthy dorms, eat almost nothing but boiled cabbage and rice porridge, and work 14 hours a day for less money in a month than Americans expect to get in a single day of hard work. If that's the standard of living you're willing to reduce the American workforce to, that's when you'll start to bring those jobs back to America. But then who will buy what they make? Canadians, Asians, and Europeans I guess?

@stephenowensmith Bush Filed 3 trade disputes with the WTO Obama filed 4. Sounds good on paper except China only joined the WTO in 2001 and there is a grace period before a dispute may be filed. Bush filed the very first dispute with the WTO against China. It is also worthy to note that the democrats took congress in 2006 making further action against China difficult to say the least.

Your comment about Romney is somewhat unfounded, for a few reasons. 1) as a businessman he is free to invest wherever he pleases. His goal is to make money. Investing in China is a good way to accomplish that goal. When he becomes President, his goal will be to "Serve and defend the Constitution" Obama has a far murkier record with China and HE IS THE PRESIDENT. Obama could have filed a dispute on Solyndra, and didn't, wasting hundreds of millions of tax dollars. He could have filed on many things, but didn't.

As for the middle east, who would you like our country to work with for foreign policy? The Saudis? That bankrolled 9/11. Or the Palestinians? The Iraqis? We have ONE solid ally in the middle east, Israel. Every other player in the region has shifted from friend to enemy to frenemy in as many years.

As for dog wagged by tail argument, humorous as it may be, Israel has wanted to beat on Iran for ages and it has been the US holding the leash, so you can see who wags who.

@chiron@polk1120 Chiron- you are dead wrong. You need to get your facts straight. According to the Academic Journal Article "China’s Century?" by Michael Beckley in International Security, Vol. 36, No. 3 (Winter 2011/12), p. 58 paragraph two states "China was the largest economy in the worldthroughout most of its “century of humiliation,” when it was ripped apart by Western powers and Japan." read the whole journal article. You cannot dispute the facts- you just speak without facts. In regards to your comments on higher education- why do all top students around the world want to study in the US? And you cannot dispute my comments on America's R&D. If China had anywhere close to the ability to innovate, it would have no need to conduct cyber espionage and steal business secrets. Again- don't come at me with words- back them up like i just did...crushing your argument to a pulp.

@nhautamaki I would love to know where you have been given your comment on China broken homes. As a Belgian living in China for the past 5 years, who also lived in Germany, US, UK, Japan and France prior to that I can DEFINITELY confirm that Chinese are harder working than other nations. As far as family values, although I have not 'lived' in Canada I doubt Canadian grand parents raise their grand children like they do in China. I would love to know where you have been given your biased outlook on China.

Not counting migrant workers that literally get beaten if they slack off of course, but they are not the 'average' Chinese person. Migrant workers make up around 1/5th to 1/4 of the workforce--a lot, but not the average by any means.

@FredericMarc@EducateAmerica@Fla4Me Romney was surging in the polls due to his populistic views. Just like everywhere else in the democratic world he was able to convince part of the electorate that his populistic views would get the economy back on track. I am glad he lost the election. It's extremely easy to convince the masses that we can do better than the current government with populistic arguments such as cheap Chinese imports or Mexican immigrants stealing our jobs but in reality it is time to look at ourselves straight in the mirror before we make our next move. We are not saints far from it. We have caused many wars and killed millions of people.

What Romney was to do if he ever got elected is to STFU or ruin the economy. What always amazes me is how American candidates are able to influence citizens who have absolutely 0 clue about economic realities to vote for them. Start a few anti dumping investigation against China, blame EU for the global recession when we know the US sub primes are actually the reason of the crisis, pretend Chinese Yuan is undervalued after we caused Japanese recession in the 90's. Seriously when is the US going to look at themselves in a straight mirror

@EducateAmerica@FredericMarc@Fla4Me When a president is so condescending, insults his opponent in debates, he insults the people who supports him. Don't you get it? Why do you think that Romney is surging in the poll? 4 weeks ago, I was not even going to vote, not liking a bit what Obama did the last 4 years, but not attracted by what Romney was willing to do in the next 4 years. But now.... after all the disinformation, the obvious media bias, and all the insults, lame jokes, I feel insulted, and want the Democrats OUT!